China telecom companies to use Qualcomm's technology

Cell phone company Qualcomm will allow Chinese telecommunications companies to use its wireless technology, clearing the way for Qualcomm's standard to break into the Chinese market.

January 2, 20024:43 PM PST

Qualcomm announced plans today to allow Chinese telecommunications companies to use the company's wireless technology, clearing the way for Qualcomm's standard to finally break into the lucrative Chinese market and perhaps the rest of Asia.

The pact with China Unicom, the country's second-largest government-owned
communications company, lays the groundwork for Chinese wireless equipment
manufacturers to make mobile handsets and network infrastructure using
Qualcomm's intellectual property and for Chinese carriers to deploy networks
based on the technology.

China Unicom negotiated the deal on behalf of the Chinese government and
other carriers and equipment makers.

The deal marks a significant win for Qualcomm, which owns the rights to--and
collects royalty fees from companies that utilize--a digital wireless voice
and data transmission method known as code division multiple access, or
CDMA. Qualcomm's technology has grown in popularity in North America where
carriers are drawn to its efficient use of wireless spectrum and its ability
to carry data and Internet traffic at high speeds.

But virtually all phones in China and much of the rest of Asia and Europe
operate on a competing protocol known as Global System for Mobile
Communications, or GSM. Analysts and wireless industry executives expect
China to present an
enormous market opportunity for equipment makers and communications
companies. Some analysts believe other countries, such as Thailand and Taiwan may eventually follow China's lead when they
upgrade their wireless networks.

"This significant agreement allows for the rapid expansion of CDMA in China
and supports China Unicom's plans for a nationwide deployment of CDMA,"
Qualcomm chief executive Irwin Jacobs said in a statement.

China Unicom plans to deploy a nationwide CDMA wireless network this year,
with the installation of network equipment expected to begin "promptly,"
according to Qualcomm.

The company only yesterday confirmed that it was in
negotiations with China Unicom, saying executives were pleased with the
progress of the talks. Chinese telecommunications and government officials
and Qualcomm executives have longed for a deal for years, but regulatory
restrictions in China and a less-mature CDMA technology prevented a deal
until now, analysts said.

"It's not any different now than it was three years ago. It's just that
three years ago (Qualcomm) couldn't get in (to China)," said Pete Peterson,
a financial analyst at Prudential Volpe Technology Group.

Qualcomm shares have traded
as high as $200 and as low as $7.63 in the past year.